Consumptionomics

Business pages don’t often carry articles about the need to forsake the growth model. I was somewhat startled to come across one prominent in the NZ Herald business supplement last week. Journalist Chris Barton wrote about the ideas of Chandran Nair, author of Consumptionomics and a speaker at this year’s Auckland Writers & Readers Festival There’s a Kindle edition of Consumptionomics so I was able to read it over the next couple of days, which I did with considerable interest.

Nair, a Malaysian of Indian descent, is founder and chief executive of the Asian think tank Global Institute for Tomorrow and writes for Asian audiences. His basic intent in Consumptionomics is to urge Asian countries not to follow the pattern of Western models of economic growth, consumption-driven and built on the exclusion of environmental and social costs. While the West may have got thus far by leaving those costs out of account there is no way in which the much larger populations of Asia can aspire to the same kind of economic development. The economic model only more or less worked when a relatively small proportion of the world’s population was using it, and then only by excluding the long-term damage to the world’s environment which now confronts us. It is folly to think that consumption-driven capitalism can be realised across the vast populations of Asia. Instead he calls for sustainable ways of living which will pass on to future generations an environment with rainforests, with biodiversity, with adequate resources, with fish in the oceans, with cities that are a pleasure to live in and with a climate that is not running out of control.

Nair is not arguing for an end to capitalism, but rather for a strong state involvement and management which will prevent the excesses of consumption on which so many economies now depend. Indeed he sees Asia as well suited to freeing capitalism from its captivity to free market fundamentalists and ideologues. It is clearly impossible for all the inhabitants of Asia to live at affluent Western levels and maintain a liveable environment. As they embark on the task of lifting the standard of living of their citizens and banishing poverty they can take a path which will do this without destroying the natural resources on which human society depends.

Nair proposes three core tenets for Asian countries.

First is the recognition that resources are constrained, no matter how much Western economic models ignore that fact, and the corollary that economic activity must be subservient to maintaining the vitality of resources. Governments, not markets, should set the priorities.

Second, resource use must be equitable for current and future generations; collective welfare takes precedence over individual rights.

Third, resources must be repriced; productivity efforts should be focused on resources, not people. This means costs must be attached to emissions, and resources such as land and water must have prices that compel people to use them in sustainable fashion. Where necessary outright bans must be placed on the use of particular resources such as rainforests or fisheries threatened by depletion.

Nair sees broad-based carbon taxes as the first step. They would strongly encourage companies and individuals to use fewer resources and use them more efficiently. They would impact on transport costs, discouraging the production of goods flown in from around the world and encouraging manufacturing closer to its intended user. He favours at the same time the lowering of taxes on income or other labour charges, with the effect of encouraging the use of labour to enhance value and moving away from the emphasis on labour productivity that has dominated capitalism to date.

Reversing the industrialisation of agriculture figures high on his list of priorities. Taxes on water, chemicals, and emissions on the energy industrial agriculture requires, along with a proper pricing of the impact of run-offs and other pollutants would raise prices but would also encourage a greater use of labour to add value and reduce environmental damage.

On transport Nair writes of the need to provide people with mobility rather than the right to own and use private cars. So long as the external costs of car owning are not factored in, public transport is disadvantaged.

Under the kind of circumstances Nair outlines for Asian countries he envisages companies finding ways of extracting value from longer-lived goods, from services built around the performance of their goods rather than their sale, and from reselling and recycling their materials and components. It’s not an unfamiliar vision for those within Western societies who have challenged the notion of endless consumption-driven growth, but Nair’s sense of its strong relevance to the emerging economies of Asia brings freshness, and perhaps a touch of hope that is difficult to sustain living in the heart of Western economies where even the financial collapse of 2008 appears to have left the growth fetish unaffected.

Nair does not put much hope in global deals in the near future, and encourages Asian countries to act on their own account. He acknowledges the problems of unilateral action, but in the difficult years ahead considers it important for Asian countries that they not wait to put into effect policies that direct them away from the prevailing growth concepts. Nor is he too worried about democratic governance, noting that democracy in a weak state is no great advance if it is unable to provide the state management needed to restrain unfettered markets. Good governance can be delivered by means other than the package of beliefs advocated by Western liberal democracies. What is important in that Asian governments take hold of the task of putting a price on resource use in their own countries and educating their populations about the reasons for doing so. He sees no reason to assume that turning away from unfettered markets will damage economic relations with other countries or mean an end to co-operation with other countries.

Yes, it means an interventionist state, though not nearly as interventionist as the state will be forced to become if the consequences of climate change and resource depletion are felt to their likely extent under the prevailing economic philosophy. Nair is careful to distinguish a strong state from an authoritarian state, and his support for state intervention comes with the stipulation that it is for the public good. He considers Western liberal democracy over-emphasises individual rights to the detriment of collective rights and is particularly critical of the pre-eminence of property rights on which Western capitalism is grounded.

Whether Asian countries will find a development path that eschews the market fundamentalism which holds the West in thrall remains to be seen, but it’s an intriguing prospect that Nair’s book points to, and one which he develops with satisfying complexity as his discussion proceeds. From a climate change perspective we have watched global forums stumble along for two decades making very little progress. Action by states independent enough to go ahead on their own account could open up possibilities which collectively we seem powerless to develop.

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